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An annual net wealth tax could inject half a trillion dollars into the economy.

In advance of Tax Day, Oxfam called for a US wealth tax to reduce extreme wealth inequality, advance racial justice, tackle the climate crisis, and protect democracy. Oxfam also highlighted how fairer taxation of the ultrawealthy could have prevented the current debt-ceiling gridlock.

The phrase "wealth inequality" is fast becoming the mantra of the 2016 presidential election. Concerns over wealth inequality are completely appropriate as it has become a major problem over the past 25 years. However, hearing the phrase constantly spoken has left people a little numb to its meaning. Wealth inequality is not a bad thing.

As a matter of fact, wealth inequality is a healthy and necessary component of a growing economy. An economy that has no wealth inequality will, most certainly, stagnate and die leaving widespread poverty behind. We want and need the right amount of wealth inequality to fuel the creative ambition that leads people to seek a better financial future.

If you want to see the impacts of climate change in America, just visit a Black neighborhood—especially on the coastal parts of the country. When people think about climate change, they focus on the obvious factors such as rising sea levels, air quality, and natural disasters. All of them, however, disproportionately impact people of color. Climate change does not function in a vacuum because humans create it. The warming of the planet works in concert with indifference to government deregulation of energy producers, politicians whose mouths are silenced and coffers are filled with corporate lobbyists’ dollars, and right-wing media disinformation campaigns dismissing climate change as a hoax. Indeed, we all will suffer if our elected officials do not put people over profits and misguided politics, but Black people are sure to suffer if we do not reverse the impacts of climate change—which the Green New Deal addresses.

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The big‐​bank bailouts during the financial crisis angered many people, including myself. Some have suggested that  could be a substitute for big banks and eliminate many of the problems associated with them, ranging from bailouts to consumer abuses, conflicts of interest and sometimes outright corruption.

Public banking options are currently under consideration in a number of cities and states including Colorado, Seattle and Santa Fe. But while we must search for a sustainable solution to the flaws in our financial system, government banks would be a cure worse than the disease.

In association with the Alliance for Community Transit — Los Angeles, LA Forward, and the Sunrise Movement LA, Public Bank LA organized a Teach In to explain how a public bank in Los Angeles would benefit residents.

The Municipal Bank of Los Angeles, as proposed by Public Bank LA, would be a wholesale bank. Los Angeles would deposit its tax revenues with the bank. Loans would be made to small businesses, to encourage the construction of affordable housing (for example, by lending to tenant organizations without collateral), and to support the development of green energy.

While community banks have again proven their importance to local communities as Paycheck Protection Program leaders, public banking proponents in some states and municipalities threaten to undermine this system and its benefits to consumers. 

Several states are considering establishing taxpayer-funded public banks. Unfortunately for local communities and taxpayers, these proposals contain considerable risks, as ICBA lays out in a  that community bankers and affiliated state association executives can use to spread the word. 

In the late 1960s Milton Friedman clarified his famous quip by stating that “In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.”

In the first part, we are all Keynesians because the government’s out of control spending has forced us to be. In the latter sense, we are not Keynesians because that spending has decimated our financial well-being. Modern Monetary Theory (MMT) is essentially an offshoot of Keynesianism in that government can spend ad nauseam and commensurately print money without any ill effect. With the historic inflation we are now experiencing, MMT has been thoroughly repudiated. MMT is dead[gone]–it must now be buried.

“Modern Monetary Theory” (or MMT) is a new approach to monetary policy that advocates argue justifies massive government spending programs, including “Medicare for All” and the “Green New Deal.”

But what is MMT, exactly?

While the accounting literature tends to focus on the tax avoidance strategies and schemes of corporations, little attention has been paid to similar strategies used by individuals (, ). To explore the case for individual wealth taxes, we make a number of assumptions based on prior literature from contemporary economists such as Piketty, Saez, and Krugman. Specifically, we understand wealth taxes to have powerful redistributive effects () and that with proper foresight, a wealth tax is relatively easy to design and administer (). We argue that a wealth tax could be used in combination with Modern Monetary Theory (MMT). Together, these provide the policy architecture needed to promote a future founded on principles of greater equality, sufficient levels of economic security, and a commitment to enriching the public store of wealth in collective assets and shared services. We will go into detail later, but for the purposes of introducing our argument, it is important to note that MMT assumes that fiscal deficits underpin a healthy economy, and that in any country that controls its own currency the government can create all the money it needs to fund itself. In so doing, both the role of tax and borrowing can be fundamentally reconceived. Importantly for the arguments in our paper, in mobilising MMT it is possible to avoid a future under which the extraordinary levels of public spending needed to combat the effects of a crisis are funded by austerity measures or levying additional taxes on low to middle-income earners (). And in freeing tax policy from revenue raising concerns, MMT means that the use of tax as a policy instrument can be directed towards moderating the many social and political inequalities arising from growing economic inequality. If we assume MMT provides a logical and actionable foundation for understanding modern money and how the state funds its programs , then we suggest that MMT can provide the foundation for new thinking about taxes and their role in creating a just society and creating the conditions in which policy emphasises and reproduces our “communal spirit” ().

The traditionally held concept of flat tax says “make investment income tax free”. But in comparison to the high income people, the lower and middle income people, are earning very little investment income. If their average $100 or even $1,000 of investment income is not subject to tax, sure, that seems like a help. But the wealthy are earning hundreds of thousands if not millions of dollars of investment income. Governor Mitt Romney for example earned over 20 million dollars of this kind of income during 2010 and 13.5 million dollars of this kind of income during 2011. If that kind of income becomes tax free, rates on income from employment or business, has to rise to make up the difference. It has to. Flat tax says, in exchange for eliminating tax on investment income, eliminate or reduce itemized deductions. As I illustrated earlier, itemized deductions are mostly a way of rewarding lower and middle income Americans who are building families and community. Eliminating itemized deductions, eliminates a significant reward and incentive for them to continue building families and community. One of the most important tax deductions to middle income people is the mortgage interest deduction. The wealthy, would love to exchange the mortgage interest deduction for tax free investment income. Why? Because the deduction for mortgage interest is limited to interest paid on no more than the first $1.1 million of acquisition and equity debt. $1.1 million. Consider this. A wealthy celebrity (you hear this all the time) buys a home for $6.8 million dollars. He puts down 25% or $1.7 million. So his remaining debt is $5.1 million. The mortgage interest on only the first $1.1 million is deductible. So the interest on the remaining $4 million is not. It helps him not one penny on his taxes. And if the interest on the $1.1 million that is deductible is at 4.5% or roughly $50,000 of mortgage interest per year, he only saves a maximum of $17,500 in federal taxes with that deduction. $17,500. That’s nothing, in comparison to the amount of taxes he would save by not having to pay taxes on hundreds of thousands, or in the case of someone like Governor Romney, millions of dollars of investment income. Tax free investment income in exchange for loss of the mortgage deduction, is definitively an uneven trade off. The mortgage deduction is there only somewhat for the poor and the wealthy. It’s really there for the middle class. It’s stuff like this, which makes flat tax a horrendous idea. If the federal government is setting the mortgage deduction limit at interest on the first $1.1 million dollars of mortgage, you know the average American mortgage is somewhere between that amount and zero. Imagine all of the home owners throughout the United States that have mortgages in that range. Take away that deduction and you take away a major incentive to plant community roots supported by investment. When that occurs, the wealthy become substantial land owners and the rest of the nation becomes tenants. And America becomes a feudal state. The wealthy cry socialism at the notion of shifting tax dollars from their pockets to the less privileged. But they actually lobby for the concept of shifting assets from the less privileged to themselves. And there’s a misconception that flat tax eliminates all deductions. Not so. It only eliminates itemized deductions. Rental expenses, including mortgage interest expense, aren’t affected. Business expenses, including mortgage interest on business property, aren’t affected. It’s only the expenses that lower and middle income people rely on to reduce their taxes, that are eliminated. The rewards for risk taken to build families and community are the only deductions eliminated by flat tax, in order to give the wealthy a tax break on their investment income at the expense of the rest. Conversely, when wealthy people solicit the government, or worse, become part of the government in an effort to gain greater tax benefits for themselves, that, feels like an entitlement. It sends a message that because they have money, they should be catered to. It’s an attitude of, why should they pay towards TSA when they have their own private jets and security. They seem to be ignoring the notion that while wealth may have its privileges, most religious belief systems hold that those blessed and empowered with great resources, have a great responsibility towards helping those who don’t. Providing tax breaks to the wealthy, doesn’t create new business opportunities or new jobs. That only occurs when wealthy people are willing to invest, their own money. Being wealthy should not entitle anyone to a tax break. Conversely, taking a positive risk to build America should.

First, while there is no doubt that many countries that have adopted the flat tax have had booming economies, there is no actual proof that the flat tax is the reason why these nations have grown. After all, many of these places were Communist nations behind the Iron Curtain. Once the collapsed they were able to open up their economies to and had an easier time trading with the developed countries in the west. In addition, a flat tax may not be as fair as one would think. A gradual tax system does allow for things like wealth redistribution, which many have argued is a major benefit to society. And a flat tax could also give families an extra burden. If someone making one million per year has to pay 18% of his income in taxes, he still has netted $820,000 for the year, a figure which still has great . But a person making $50,000 per year is left with $41,000 per year; that difference can influence fiscal decisions, like purchasing a new car versus a used car, whether to place a on a house or affording either a state school or private college, extremely tough for people who make closer to the national median income level. In addition, when a group of countries near each other enact a flat tax, it creates a race towards the bottom; in order to compete, nations must keep on lowering their tax rates, a problem that could lead to fiscal instability. Lastly, in the wake of the 2008 , many countries that adopted a flat tax have suffered greatly. Take, for instance, Latvia, one of the earliest countries to adopt the flat tax. Its overheated economy suffered a near-complete liquidity squeeze, which caused its GDP to decline approximately 25% between 2008 and 2010, and unemployment to climb to nearly 21% of the population.8 It had to take a from the in order to pay public sector workers. The country recovered but decided to ditch the flat tax on personal income in 2017.9 It now has a progressive system with rates rising from 20% to 31% as a taxpayer's income increases.10 Latvia's Baltic neighbors, Lithuania and Estonia, also faced similar pitfalls during the global Great Recession. All of this, some say, is a sign that these nations failed to raise enough tax dollars due to their tax policies. Others, however, say that these nations rely on exports, which suffered greatly due to the downturn facing major economies.

For those that aren’t familiar, a “flat tax” is a single tax rate applied to all taxpayers regardless of income. That means that Kansans earning the lowest income will be taxed at the same rate as Kansans earning the highest.

I oppose this policy for many reasons. First, it will disproportionately benefit the wealthiest and hurt the poorest in our state. To put that in perspective, under this plan, the lowest-income Kansans would save a little over $40 per year. Meanwhile, the wealthiest Kansans would save over $5,000 every year – over 100 times more in savings than low-income Kansans.  In fact in the Senate version of the flat tax bill 43% of the cut in tax dollars will go to just 3% of those paying taxes.

First, while there is no doubt that many countries that have adopted the flat tax have had booming economies, there is no actual proof that the flat tax is the reason why these nations have grown. After all, many of these places were Communist nations behind the Iron Curtain. Once the Soviet Union collapsed they were able to open up their economies to investment and had an easier time trading with the developed countries in the west.

In addition, a flat tax may not be as fair as one would think. A gradual tax system does allow for things like wealth redistribution, which many have argued is a major benefit to society. And a flat tax could also give middle-class families an extra burden. If someone making one million per year has to pay 18% of his income in taxes, he still has netted $820,000 for the year, a figure which still has great purchasing power. But a person making $50,000 per year is left with $41,000 per year; that difference can influence fiscal decisions, like purchasing a new car versus a used car, whether to place a down payment on a house or affording either a state school or private college, extremely tough for people who make closer to the national median income level.

We need a tax plan that takes the opposite approach of the Trump tax plan, and the Obama-era tax plan that preceded it. A February 2019 poll, found that 76 percent of registered voters want the wealthiest Americans to pay more. Rather than failing to build the economy by reducing taxes on the wealthy, we need to actually build the economy by creating a strong foundation of purchasing power in the working class by ending poverty and economic insecurity.

First, we need to end the regressive payroll tax by lifting the $128,400 cap on Social Security taxes. Currently, undocumented immigrants contribute billions of dollars in federal taxes each year, and their income taxes and payroll tax dollars are keeping Social Security and Medicare solvent showing the hypocrisy and dishonesty of the immigration debate in the U.S. Lifting the cap on taxes for the wealthy would put Social Security on such a firm financial footing that it would be a major contribution to doubling Social Security payments in order to address the retirement security crisis.

As we enter the third decade of the 21st century, humanity faces so many issues and questions, that it is really hard to know what to focus on. So I would like to use the next 20 minutes to help us focus on all the different issues we face. Three problems pose existential challenges to our species. These three existential challenges are nuclear war, ecological collapse and technological disruption. We should focus on them. Now nuclear war and ecological collapse are already familiar threats, so let me spend some time explaining the less-familiar threat posed by technological disruption. In Davos, we hear so much about the enormous promises of technology — and these promises are certainly real. But technology might also disrupt human society and the very meaning of human life in numerous ways, ranging from the creation of a global useless class to the rise of data colonialism and of digital dictatorships. SOCIO-ECONOMIC UPHEAVAL Automation will soon eliminate millions upon millions of jobs, and while new jobs will certainly be created, it is unclear whether people will be able to learn the necessary new skills fast enough. Suppose you are a 50-year-old truck driver, and you just lost your job to a self-driving vehicle. Now there are new jobs in designing software or in teaching yoga to engineers — but how does a 50-year-old truck driver reinvent himself or herself as a software engineer or as a yoga teacher? And people will have to do it not just once but again and again throughout their lives, because the automation revolution will not be a single watershed event following which the job market will settle down into a new equilibrium. Rather, it will be a cascade of ever bigger disruptions, because artificial intelligence (AI) is nowhere near its full potential. Old jobs will disappear, new jobs will emerge, but then the new jobs will rapidly change and vanish. Whereas in the past humans had to struggle against exploitation, in the 21st century, the really big struggle will be against irrelevance. And it is much worse to be irrelevant than exploited. Those who fail in the struggle against irrelevance would constitute a new ‘useless class’ — people who are useless not from the viewpoint of their friends and family, but useless from the viewpoint of the economic and political system. And this useless class will be separated by an ever-growing gap from the ever more powerful elite. THE AI REVOLUTION CREATING UNPRECEDENTED INEQUALITY BETWEEN CLASSES AND COUNTRIES In the 19th century, a few countries like Britain and Japan industrialised first, and they went on to conquer and exploit most of the world. If we are not careful, the same thing will happen in the 21st century with AI. We are already in the midst of an AI arms race, with China and the US leading the race, and most countries being left far, far behind. Unless we take action to distribute the benefit and power of AI between all humans, AI will likely create immense wealth in a few high-tech hubs, while other countries will either go bankrupt or become exploited data colonies. Now we are not talking here about a science fiction scenario of robots rebelling against humans. We are talking about far more primitive AI, which is nevertheless enough to disrupt the global balance. Just think what will happen to developing economies once it is cheaper to produce textiles or cars in California than in Mexico? And what will happen to politics in your country in 20 years, when somebody in San Francisco or Beijing knows the entire medical and personal history of every politician, every judge and every journalist in your country, including all their sexual escapades, all their mental weaknesses and all their corrupt dealings? Will it still be an independent country or will it become a data colony? When you have enough data, you do not need to send soldiers in order to control a country. THE RISE OF DIGITAL DICTATORSHIPS AND GLOBAL MONITORING This danger can be stated in the form of a simple equation, which I think might be the defining equation of life in the 21st century: B ×C×D =AHH! Which means? Biological knowledge multiplied by computing power multiplied by data equals the ability to hack humans, ahh! If you know enough biology and have enough computing power and data, you can hack my body and my brain and my life, and you can understand me better than I understand myself. You can know my personality type, my political views, my sexual preferences, my mental weaknesses, my deepest fears and hopes. You know more about me than I know about myself. And you can do that not just to me, but to everyone. A system that understands us better than we understand ourselves can predict our feelings and decisions, can manipulate our feelings and decisions and can ultimately make decisions for us. Now in the past, many governments and tyrants wanted to do it, but nobody understood biology well enough, and nobody had enough computing power and data to hack millions of people. Neither the Gestapo nor the KGB could do it. But soon at least some corporations and governments will be able to systematically hack all the people. We humans should get used to the idea that we are no longer mysterious souls — we are now hackable animals. That is what we are. The power to hack humans can be used for good purposes — like providing much better healthcare. But if this power falls into the hands of a 21st-century Stalin, the result will be the worst totalitarian regime in human history. And we already have a number of applicants for the job of 21stcentury Stalin. Just imagine North Korea in 20 years, when everybody has to wear a biometric bracelet that constantly monitors your blood pressure, your heart rate, your brain activity 24 hours a day. You listen to a speech on the radio by the great leader, and they know what you actually feel. You can clap your hands and smile, but if you are angry, they know, you will be in the gulag tomorrow. And if we allow the emergence of such total surveillance regimes, do not think that the rich and powerful in places like Davos will be safe, just ask Jeff Bezos. In Stalin’s USSR, the state monitored members of the communist elite more than anyone else. The same will be true of future total surveillance regimes. The higher you are in the hierarchy — the more closely you will be watched. Do you want your chief executive officer or your president to know what you really think about them? So it is in the interest of all humans, including the elites, to prevent the rise of such digital dictatorships. And in the meantime, if you get a suspicious WhatsApp message, from some Prince, do not open it. Now if we indeed prevent the establishment of digital dictatorships, the ability to hack humans might still undermine the very meaning of human freedom. Because as humans will rely on AI to make more and more decisions for us, authority will shift from humans to algorithms and this is already happening. Already today billions of people trust the Facebook algorithm to tell us what is new, the Google algorithm tells us what is true, Netflix tells us what to watch, and the Amazon and Alibaba algorithms tell us what to buy. In the not-so-distant future, similar algorithms might tell us where to work and who to marry, and also decide whether to hire us for a job, whether to give us a loan, and whether the central bank should raise the interest rate. And if you ask why you were not given a loan, and why you the bank did not raise the interest rate, the answer will always be the same — because the computer says no. And as the limited human brain lacks sufficient biological knowledge, computing power and data — humans will simply not be able to understand the computer’s decisions. So even in supposedly free countries, humans are likely to lose control over our own lives and also lose the ability to understand public policy. Already now, how many humans understand the financial system? Maybe 1 per cent, to be very generous. In a couple of decades, the number of humans capable of understanding the financial system will be exactly zero. Now we humans are used to thinking about life as a drama of decision-making. What will be the meaning of human life when most decisions are taken by algorithms? We do not even have philosophical models to understand such an existence. The usual bargain between philosophers and politicians is that philosophers have a lot of fanciful ideas, and politicians basically explain that they lack the means to implement these ideas. Now we are in an opposite situation. We are facing philosophical bankruptcy. The twin revolutions of infotech and biotech are now giving politicians the means to create heaven or hell, but the philosophers are having trouble conceptualising what the new heaven and the new hell will look like. And that is a very dangerous situation. If we fail to conceptualise the new heaven quickly enough, we might be easily misled by naïve utopias. And if we fail to conceptualise the new hell quickly enough, we might find ourselves entrapped there with no way out. Technological disruption of not just our economy, politics and philosophy but also our biology In the coming decades, AI and biotechnology will give us godlike abilities to reengineer life, and even to create completely new life forms. After four billion years of organic life shaped by natural selection, we are about to enter a new era of inorganic life shaped by intelligent design. Our intelligent design is going to be the new driving force of the evolution of life and in using our new divine powers of creation, we might make mistakes on a cosmic scale. In particular, governments, corporations and armies are likely to use technology to enhance human skills that they need — like intelligence and discipline — while neglecting other humans skills – like compassion, artistic sensitivity and spirituality. The result might be a race of humans who are very intelligent and very disciplined but lack compassion, artistic sensitivity and spiritual depth. Of course, this is not a prophecy. These are just possibilities. Technology is never deterministic. In the 20th century, people used the same industrial technology to build very different kinds of societies: fascist dictatorships, communist regimes, liberal democracies. The same thing will happen in the 21st century. AI and biotech will certainly transform the world, but we can use them to create very different kinds of societies. And if you are afraid of some of the possibilities I have mentioned, you can still do something about it. But to do something effective, we need global cooperation. GLOBAL PROBLEMS THAT DEMAND GLOBAL SOLUTIONS Whenever a leader says something like ‘My country first!’ we should remind that leader that no nation can prevent nuclear war or stop ecological collapse by itself, and no nation can regulate AI and bioengineering by itself. Almost every country will say, ‘Hey, we don’t want to develop killer robots or to genetically engineer human babies. We are the good guys. But we can’t trust our rivals not to do it. So we must do it first’. If we allow such an arms race to develop in fields like AI and bioengineering, it does not really matter who wins the arms race — the loser will be humanity. Unfortunately, just when global cooperation is more needed than ever before, some of the most powerful leaders and countries in the world are now deliberately undermining global cooperation. Leaders like the US president tell us that there is an inherent contradiction between nationalism and globalism, and that we should choose nationalism and reject globalism. But this is a dangerous mistake. There is no contradiction between nationalism and globalism. Because nationalism is not about hating foreigners. Nationalism is about loving your compatriots. And in the 21st century, in order to protect the safety and the future of your compatriots, you must cooperate with foreigners. So in the 21st century, good nationalists must be also globalists. Now globalism does not mean establishing a global government, abandoning all national traditions or opening the border to unlimited immigration. Rather, globalism means a commitment to some global rules. Rules that do not deny the uniqueness of each nation, but only regulate the relations between nations. THE WORLD CUP: AN EFFECTIVE MODEL FOR GLOBAL COOPERATION The World Cup is a competition between nations, and people often show fierce loyalty to their national team. But at the same time, the World Cup is also an amazing display of global harmony. France cannot play football against Croatia unless the French and the Croatians agree on the same rules for the game. And that is globalism in action. If you like the World Cup — you are already a globalist. Now hopefully, nations could agree on global rules not just for football, but also for how to prevent ecological collapse, how to regulate dangerous technologies and how to reduce global inequality. How to make sure, for example, that AI benefits Mexican textile workers and not only American software engineers. Now of course, this is going to be much more difficult than football — but not impossible. Because the impossible, well we have already accomplished the impossible. We have already escaped the violent jungle in which we humans have lived throughout history. For thousands of years, humans lived under the law of the jungle in a condition of omnipresent war. The law of the jungle said that for every two nearby countries, there is a plausible scenario that they will go to war against each other next year. Under this law, peace meant only ‘the temporary absence of war’. When there was ‘peace’ between — say — Athens and Sparta, or France and Germany, it meant that now they are not at war, but next year they might be. And for thousands of years, people had assumed that it was impossible to escape this law. But in the last few decades, humanity has managed to do the impossible, to break the law and to escape the jungle. We have built the rule-based liberal global order that, despite many imperfections, has nevertheless created the most prosperous and most peaceful era in human history. Peace has changed ‘Peace’ no longer means just the temporary absence of war. Peace now means the implausibility of war. There are many countries that you simply cannot imagine going to war against each other next year — like France and Germany. There are still wars in some parts of the world. I come from the Middle East, so believe me, I know this perfectly well. But it should not blind us to the overall global picture. We are now living in a world in which war kills fewer people than suicide, and gunpowder is far less dangerous to your life than sugar. Most countries — with some notable exceptions like Russia — do not even fantasise about conquering and annexing their neighbours. Which is why most countries can afford to spend maybe just about 2 per cent of their gross domestic product on defence, while spending far, far more on education and healthcare. This is not a jungle. Unfortunately, we have gotten so used to this wonderful situation that we take it for granted, and we are therefore becoming extremely careless. Instead of doing everything we can to strengthen the fragile global order, countries neglect it and even deliberately undermine it. The global order is now like a house that everybody inhabits and nobody repairs. It can hold on for a few more years, but if we continue like this, it will collapse — and we will find ourselves back in the jungle of omnipresent war. We have forgotten what it is like, but believe me as a historian — you do not want to be back there. It is far, far worse than you imagine. Yes, our species has evolved in that jungle and lived and even prospered there for thousands of years, but if we return there now, with the powerful new technologies of the 21st century, our species will probably annihilate itself. Of course, even if we disappear, it will not be the end of the world. Something will survive us. Perhaps the rats will eventually take over and rebuild civilisation. Perhaps, then, the rats will learn from our mistakes.

Some ideas are so absurd, the adage goes, that only an intellectual could believe them. The global minimum corporate tax  by U.S. Treasury Secretary Janet Yellen is one of them. The proposal will not only embarrass U.S. President Joe Biden because of its likely failure, but could also empower countries seeking to undermine the liberal international order, especially China and Russia.

The underlying concept’s resonance with liberal politicians like U.S. President Joe Biden is as unsurprising as its appeal to a liberal intellectual like Yellen. The world’s governments would start approaching multinational corporations like they approach the labor market—only instead of a global minimum wage, they would collectively demand a global minimum tax. The intended effect: more money for governments and less money for corporations. To its proponents, an equal minimum tax has an appealing moral clarity. And it’s an elegant concept in economic theory. 

Raising the corporate income tax is often promoted as a way to generate revenue for helpful government services.

Unfortunately, higher corporate taxes typically hurt the very people they’re supposed to help, because they lead to lost wages and fewer opportunities for many workers.

A carbon tax reflecting the social cost of carbon is viewed as an essential policy tool to limit carbon emissions: high prices for carbon-emitting goods reduce demand for them.  Some countries have already adopted such a tax and discussions are ongoing in others. There are proponents of a global carbon tax too. Yet, governments are often keener to adopt measures other than a tax to contain carbon emissions. And  It is natural to ask why a carbon tax is not used universally in preference to other policies to limit emissions and why, even if there is such a tax, other policies are needed too. There are good reasons why governments may not want to use carbon taxes, and one of them relates to their welfare impacts. For example, a carbon tax on fossil fuels is often regressive in its impact- hurting poorer people relatively more than richer ones. Even when it might be progressive, poorer people still suffer a welfare loss when prices rise, making their consumption basket more expensive. Devising transfers to compensate them for this loss is not a simple matter. Compensation systems may not be well developed, and it may be difficult to identify those hurt or to get funds to them. Thus,  because there are entrenched business interests that would lose. Letting market prices of fossil fuels rise immediately to reflect social costs may not be desirable for other reasons too.  as people, capital and other resources do not flow seamlessly into new sectors. During the transition, resources can be unemployed for long periods, and the larger the immediate price increase, the larger the potential disruption in the short term. Some of the resources used in other sectors will flow into the renewable energy and supporting sectors where both investment and jobs will increase. Yet, this too, will not automatically and immediately make up for disinvestment in fossil fuels, as is already evident. Supply- demand mismatches will happen in the short run. Add to this substantial uncertainty regarding several economic variables, such as the size of fuel reserves, the size of stranded assets, the harshness of winter, the future direction of climate policy, the pace of innovation in the renewables sector, or demand risk, and it is clear how economic disruption may be magnified. Another issue with carbon taxes is that they target carbon dioxide emitted from fossil fuels. They do not directly target other carbon compounds, such as methane, which has a short atmospheric lifetime but a large warming potential. Carbon emissions from agriculture/livestock, deforestation, waste management, or poor land use, are hard to assess and monitor and these are generally not taxed directly. Alternative, non-tax- based policies are needed and used to limit carbon and other GHG emissions from these sources. These include altering manure and waste management, feeding or land- use practices, among others. Thus, governments use a variety of targeted policies, and regulations, spreading the adjustment across different segments of markets, societies, and time – in effect, setting a range of implicit taxes and other fiscal incentives. For example, banning all imports of non-EV luxury vehicles, or taxing emissions from all luxury yachts- are clearly policies that aim to penalize wealthier consumers. Requiring office buildings to install energy-saving devices is another targeted regulation; raising parking fees in cities, investing in green public transport, or providing government subsidies for investments in renewable energy are others. , political sustainability is key, and distribution matters. Where the additional cost of various policies eventually falls depends on the policy package used and the characteristics of the market. But there clearly is a case for a rich policy toolbox.

Winning Hearts and Minds. Some Republican politicians and business groups claim supporting a carbon tax is smart politics because “you can’t beat something with nothing.” They argue that America will end up with more extreme climate policies unless conservatives get behind a CO2 tax.

That reasoning is mistaken on many levels. First, Presidents Obama and Biden, Democratic leaders in Congress, agency officials, climate campaigners, and renewable energy lobbyists have never made a serious proposal to swap federal and state greenhouse gas regulations and large spending programs for a CO2 tax. Why would they? Those policies are far more effective than a CO2 tax in transferring wealth to favored constituencies and expanding the regulatory industrial complex they largely control.  

Winning Hearts and Minds. Some Republican politicians and business groups claim supporting a carbon tax is smart politics because “you can’t beat something with nothing.” They argue that America will end up with more extreme climate policies unless conservatives get behind a CO2 tax.

That reasoning is mistaken on many levels. First, Presidents Obama and Biden, Democratic leaders in Congress, agency officials, climate campaigners, and renewable energy lobbyists have never made a serious proposal to swap federal and state greenhouse gas regulations and large spending programs for a CO2 tax. Why would they? Those policies are far more effective than a CO2 tax in transferring wealth to favored constituencies and expanding the regulatory industrial complex they largely control.